Artist’s impression of how the West Hendon estate will look.
Photograph: Barratt Homes

A Conservative council has been accused of “social cleansing” and gerrymandering over an attempt to force families to sell their homes for less than half the price of planned replacement apartments.

The London borough of Barnet’s use of compulsory purchase powers to buy flats as part of the £520m rebuilding of the West Hendon estate by Barratt Homes is being challenged at a public inquiry by residents who say they are being forced out of the area.

They claimed Barratt’s offer of £175,000 to buy a two-bedroom flat and £115,000 for a one-bedroom flat would allow just three of the 36 owners affected in the first phase of the development to stay in an area where many had spent most of their lives. Two-bed flats in the replacement scheme by Barratt and its joint venture partner, Metropolitan Homes, are expected to sell for up to £415,000.

Hundreds of council tenants are also facing being rehoused several miles away from their community because only 12.5% of the 2,000 new homes that will replace the 679 residences being demolished, will be classed as affordable – a net reduction of 199 homes classed as affordable or social on the site. Another 12.5% will be available for shared ownership with the housing association. The rest will be sold on the open market.

“We are being forced out of our homes, our housing torn down, our presence eradicated, in order to make way for luxury developments, from which we are excluded,” said Karim Khalick, leader of the leaseholder group, People Power West Hendon, in a statement to the inquiry. “What can you call that, other than social cleansing?”

The challenge to the council’s plan is part of an increasingly vociferous opposition movement which has involved residents blocking construction traffic to sites on the estate that are already under redevelopment. Campaigners have been encouraged by the recent success of tenants of the New Era estate in east London in preventing the US investor Westbrook Partners from evicting them and tripling rents. The leaders of the New Era campaign will speak at a rally for the opponents of the West Hendon development on Thursday. A final decision on the plan will be made by the secretary of state for communities, Eric Pickles.

Khalick, a 59-year old warehouse manager, whose family has lived on the estate for 40 years, accused Barnet of failing to care about the human cost of its decisions, which he claimed “subject us to years of distress, trapped in worthless properties, or living year to year in unsecured tenancies, unable to get on with our lives”. Barnet, he claimed, was engaged in gerrymandering through a “systematic destruction” of a Labour-voting community and their replacement with “more affluent residents and voters – this is inevitably going to give political advantage to the Conservatives who run this council”.

Adam Langleben, the Labour councillor for West Hendon, told the inquiry in a statement: “The offer is laughable … It is not an accurate market valuation.”

Richard Cornelius, the leader of Barnet council, said: “The regeneration project will transform the estate and will provide high quality and attractive new homes at a time when public finances are incredibly tight. We believe that this is very much in the public interest.”

The developers and Barnet pledged to residents in 2002 that everyone would be rehoused on the site and homeowners’ properties would be bought at current housing prices. They conceded these pledges were now being broken but said the scheme had to be rethought because of the “drastic and unforseen economic downturn of the late 2000s”.

Representing Barnet and Barratt Homes, Neil King QC told the inquiry that the CPO order was legitimate and long-leaseholders would be given the chance to buy a 50% share in a home on the new estate and that the “great majority” of leaseholders would be able to afford that.

He said the existing estate was badly lit, lacked proper security, was poorly insulated and provided “poor quality living accommodation”. He argued that the “very significant public benefits” of the regeneration “justify the inevitable interference with individual rights” that would result from the CPO. He told a planning inspector, Zoe Hill: “If the order is not confirmed, the scheme cannot proceed.”

He added that council tenants on secured agreements would be rehoused in homes with the same number of bedrooms on the site, while those on unsecured tenancies would be offered alternative homes – although those so far rehoused under these terms had had to move an average of three miles away. Campaigners said one householder had been relocated as far away as Luton.